British banks exposed to Dubai debt form steering comitee

Bondholders and creditors have begun mobilising in response to Dubai World’s $26bn restructuring plans, as Dubai’s ruler on Tuesday sought to reassure investors that his debt-laden emirate’s economy remained sound.

The move by banks and hedge funds to form a representative group comes amid concerns among investors that a request for a six-month standstill on its debt agreement with creditors by Dubai World – one of Dubai’s flagship entities – could develop into a broader restructuring.

In his first public statement since Dubai World announced a debt standstill last Wednesday, Sheikh Mohammed bin Rashid al-Maktoum, Dubai’s ruler, lauded the United Arab Emirates economy, saying it had become “stronger and more cohesive”.

With Dubai struggling under more than $80bn of debt, many investors believe the emirate, which has meagre oil resources, will be dependent on federal support, bankrolled by Abu Dhabi, the UAE’s wealthy capital.

“We in the Emirates and in Dubai in particular are strong and tenacious and we have the determination and strength of will to confront all challenges,” said Sheikh Mohammed, who is also the UAE’s prime minister.

In a more belligerent tone, he accused the media of exaggerating Dubai’s problems. “It is the fruit-bearing tree that becomes the target of [stone] throwers,” he said. “What about someone who has seven fruit trees? It’s normal for us to be facing this campaign and this exaggerated media noise.”

Investors in $3.5bn of bonds sold by Nakheel, Dubai World’s real estate arm, have formed an ad-hoc group expected to represent more than 25 per cent of the issue – enough to block any restructuring plans for the bonds. The $3.5bn Islamic bond issued by Nakheel was due to be redeemed on December 14.

Leading members of the bondholders’ group have appointed the law firm Ashurst to advise them in talks with the borrower, a spokesman for the firm said. The group, which includes US hedge fund QVT, is made up of holders of bonds which carry a guarantee from Dubai World and are currently trading around 55 per cent of face value.

A group of banks – RBS, Standard Chartered, HSBC, Lloyds and two UAE banks – have formed a steering committee under the aegis of KPMG to represent creditors of Dubai World, a person familiar with the matter said. The committee expects to meet the company on Sunday or Monday, the person said. Dubai World said its restructuring would involve $26bn of debt.

http://www.ft.com/cms/s/0/f6965a5a-deae-11de-adff-00144feab49a.html

FTSE up 1.7 %. That´s the logic nowadays...

 

Nov. 27 (Bloomberg) -- Royal Bank of Scotland Group Plc was the biggest underwriter of loans to Dubai World, the state company seeking to reschedule debt, while HSBC Holdings Plc has the most at risk in the United Arab Emirates, according to JPMorgan Chase & Co.

RBS, the largest U.K. government-controlled bank, arranged $2.3 billion, or 17 percent, of Dubai World loans since January 2007, JPMorgan said in a report today, citing Dealogic data.

HSBC, Europe’s biggest bank, has the “largest absolute exposure” in the U.A.E. with $17 billion of loans in 2008, JPMorgan said, citing the Emirates Banks Association.

Abu Dhabi Commercial Bank PJSC may be owed $1.9 billion by Dubai World, making it the largest creditor outside the emirate, said two people familiar with the companies.

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